Sequester And Shutdown Could Be More Likely Than A Fight Over The Debt Ceiling

January 16, 2013

Stan Collender

Over at The Plum Line, Greg Sargent has an important post about the way the debt ceiling fight could end without triggering a cash-crunch crisis for the federal government. Greg thinks is could be one of two possibilities.

First, the House GOP could agree to a version of the plan first proposed by Senate Minority Leader Mitch McConnell (R-KY) that helped solve the last debt ceiling fight in August 2011. That plan effectively transfers the ability to raise the government’s borrowing to the president. Greg notes that this time the plan would be approved over the legislative equivalent of McConnell’s dead body, that is, over a filibuster McConnell himself would lead. Greg also notes, however, that there may well be enough Senate Republicans willing to join the 55 Democrats to make this happen.

Second, Greg says that the same combination of Democrats and some Republicans in the House that voted for the fiscal cliff deal would likely approve the McConnell plan or a clean debt ceiling increase if the GOP leadership allowed the vote to take place.

Both options are plausible for a basic reason Greg does not mention: The GOP seems to be coming to the conclusion that fighting over the debt ceiling is not its best option. The better fight, and the one that gives them more leverage and scores them more political points with their base, may be to punt on the debt ceiling and instead use the sequester spending cuts that will occur on March 1 and the threat of a government shutdown on March 28 to force concessions on sending from the White House.

In fact, given the three options — debt ceiling, sequester, continuing resolution — the debt ceiling may actually be the worst rather than the best place for the GOP to make a stand this year.

From a logistical point of view, refusing to increase the debt ceiling won’t have the impact on federal spending the GOP wants and needs to show it’s base because spending is not automatically cut if the debt ceiling isn’t increased. Add the chaos that could create on Wall Street, and the anger that would likely cause from the bond market, and the GOP doing the equivalent of holding its breath until it turns blue on the debt ceiling might not win it anything at all.

By contrast, the sequester is an immediate spending cut. Yes, it includes military reductions the contractor community hates, but over the past two years the GOP has already repeatedly demonstrated it is willing to throw the Pentagon under the deficit reduction bus. Plus, House and Senate Republicans might need military spending supporters to push the White House and congressional Democrats to substitute other spending cuts for the military sequester — what the GOP wants — and actually having the sequester go into effect could be the best way to make that happen.

Not extending the continuing resolution that expires on March 27th at midnight and shutting down the government for a few days or weeks might also be a better option than refusing the raise the debt ceiling because that too would result in immediate spending reductions. The spectacle of a federal shutdown and the obvious demonstration to the GOP base that would be of the willingness of Republican members to go to great lengths to cuts spending might be seen as a big plus.

That’s not to say there aren’t huge political risks in punting on the debt ceiling and focusing on the other two options. Not using the debt ceiling as leverage after threatening to do so for so long could be seen as a unilateral concession by the GOP base. Allowing the sequester to occur no doubt will anger the military community. And the GOP really took it on the chin politically after the last two government shutdowns in 1995 and 1996.

Nevertheless, if Sargent is right and the GOP is looking for ways to deal with the debt ceiling or are starting to understand that it doesn’t really provide the political leverage it once had assumed, punting to the sequester and a government shutdown would be the two most likely options.

Recent Stories by Stan Collender

There are many reasons why the next budget fight will be more difficult than any of the close-to-debacles that have occurred in recent years. This year the biggest complication is that the budget fight isn't about the budget. It's about Obamacare.

As I've said before, I'm calling the end of this year's debate two things: budget bedlam and "#cliffgate." No matter which name you use, it will begin when Congress returns to Washington next week.

About Stan Collender

Stan Collender is a former New Yorker who, after getting a graduate degree in public policy from the University of California, Berkeley, moved to Washington to get it out of his system. That was 35 years ago.
He tweets at @thebudgetguy